Operations Strategies

Question 1

Lead time

Answer 1

The time it takes for a supplier to provide its customer with the goods ordered; that is, the time between the supplier’s receipt of an order for goods until the delivery of those goods to the purchaser.

Question 2

Bottleneck

Answer 2

Where output is limited by one aspect of operations.

Question 3

Productive capacity

Answer 3

The maximum potential output of a business.

Question 4

Stock-out

Answer 4

A situation in which a business runs out of inventory.

Question 5

Break-even point

Answer 5

When total revenue from sales equals total costs of operation. Any increase in output and sales means the business will begin to make a profit.

Question 6

Electronic data interchange (EDI)

Answer 6

Use of computers, barcodes and scanner systems to monitor individual stock items and keep accurate records of inventory levels.

Question 7

Vertically integrate

Answer 7

When a business purchases a controlling interest in other businesses in its supply chain.

Question 8

Transport logistics

Answer 8

The organisation of the physical movement of inputs and outputs from their point of origin to their destination. The route, method and speed of transportation are all factors to consider when delivering inputs into outputs.

Question 9

Technology

Answer 9

The equipment, materials and knowledge that are available to help businesses perform certain functions or make products.

Question 10

Inventory

Answer 10

Includes the raw materials and inputs supplies used in the production process, the goods that are partially processed and the firm’s finished products, which are also known as stock.

Question 11

Obsolescence

Answer 11

Loss of value of, or need for, an object, service or practice by its becoming less suitable for use.

Question 12

Quality control

Answer 12

Checking resources and products in all stages of the production process; includes feed-forward, concurrent and feedback controls.

Question 13

Benchmarking

Answer 13

The process of measuring performance against established standards, such as a comparison of a firm’s performance against standards set by competitors in the same industry in the domestic market.

Question 14

Quality assurance

Answer 14

Establishing and using a set of procedures and/or processes that will prevent products from having problems.

Question 15

Quality circles

Answer 15

Regular meetings of a group of employees from different sections of the business to discuss issues arising in the workplace.

Question 16

Total quality management (TQM)

Answer 16

An approach to quality control that relies on continuous improvement in all aspects of the business.

Question 17

Driving force

Answer 17

A force that pushes towards the need for change.

Question 18

Restraining force

Answer 18

A force that holds back a business and resists change.

Question 19

Global web strategy

Answer 19

Involves a business sourcing inputs from the cheapest regions, manufacturing where it is cheapest to do so, obtaining finance from the country with the lowest interest rates and distributing products to any nation that demands them.

Question 20

Patent

Answer 20

Gives the owner the exclusive rights to sell, market, license or make a profit from an invention, innovation or production technique.

Question 21

World’s best practice

Answer 21

Comparison of a firm’s performance with the highest standards achieved worldwide.